Finance Minister Nirmala Sitharaman has reacted sharply to Raghuram Rajan's views on the slowdown of the Indian economy. Rajan was appointed Governor of Reserve Bank of India in 2013 during UPA 2, headed by Manmohan Singh.
Now, he is going about saying that the Modi Government lacks vision on economic growth.
Addressing a select gathering at the Consulate General of India in New York City recently, the Finance Minister hit back by categorically stating that it was during Raghuram Rajan's time that huge loans were disbursed only on a phone call from crony leaders.
Taking a dig at Manmohan Singh, who was the Prime Minister when all this was happening, Sitharaman said that Manmohan Singh is supposed to have an articulated vision of the Indian economy. She also observed that Indian Public Sector banks did not have the worst phase than when there was this combination of Manmohan Singh as Prime Minister and Raghuram Rajan as Governor of Reserve Bank of India.
On what ails our banks today and what is the genesis of the bad loan crisis. the Finance Minister said Dr Rajan had himself told a Parliamentary Panel that a large number of bad loans could be linked to the period between 2006 and 2008. This is the time when Manmohan Singh was the Prime Minister - so where should the buck stop?
After winning the Nobel Prize in Economics, Abhijit Banerjee is reported to have said: "Indian economy is on shaky ground." "In the last five-six years, at least we could witness some growth, but now that assurance is also gone."
According to Banerjee, in the short term, Modi government policies are not highly simulating. Besides Ujjwala, the other flagship schemes of the Modi Government are not putting cash in the hands of anybody.
If the Finance Minister were to take his advice, Banerjee said that he would probably say, "Get some more money in the hands of the poor and they will spend it."
Its all about increasing consumption but we don’t increase consumption by increasing bank accounts. On the consumption front, both Banerjee and Raghuram Rajan perfectly gel and have the same take. But this is looking at the problem - the state of the national economy - through the keyhole.
Running a country with a vision is more important than building a short-term road map only to woo the voters. The pitfalls of short term policies notwithstanding, Congress leader Rahul Gandhi has chosen to stick to the same plank crafted by the likes of Banerjee and Rajan.
During campaigning for the Maharashtra and Haryana State Assembly election, Rahul Gandhi again took a jibe at Prime Minister Narendra Modi and his Government while taking credit for Mahatma Gandhi Rural Employment Guarantee Scheme that was introduced by the Manmohan Singh Government to ensure money directly reached the poor in the countryside.
Then Rahul had also upped his campaign for the 2019 Parliamentary election by announcing the NYAY scheme, which Abhijit Banerjee had helped conceptualise. After the people of India have rejected this scheme and shown the Congress party its place, Banerjee is again advocating the idea of direct money transfer in a big way. And Rahul is trying to play the game of one-upmanship with Modi on the agenda of neo-patrimonialism.
People appear fully capable of seeing through all this and as far as the outcome of the general election to the State Assemblies of Maharashtra and Haryana is concerned, for the main Opposition Congress, the writing is clear on the wall.
More about Abhijit and his observations about the present state of Indian economy would follow on the basis of analysis of past follies, including the way policies influenced by the Global Research Centre founded by Banerjee and company in the US were tested in a State like Madhya Pradesh - the central Indian State - 1999 onwards and how the people had rejected a popularly elected government moving on this path in the 2003 election, when Madhya Pradesh had the potential but was still devoid of the economic infrastructure and lacked a positive track record in terms of human resource development, which is so essential for economic growth.
1999 was the starting point in Madhya Pradesh when the then State government focused only on imparting training to teachers at the primary school level and totally neglected the issue of schools devoid of basic facilities. There was also a lopsided approach when it came to building the infrastructure and human resource development for the sake of economic growth. In the process, a whole generation has now multiplied in geometric progression, which is barely able to sustain itself and the quality of life for a big section of the population remains a far cry. It is unfortunate that political games are being played over the state of the economy and even acclaimed economists have become a party to political machinations.
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)